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(a) Price of a good falls from Rs. 20 per unit to Rs. 16 per unit. As a result, its demand rises from 80 units to 100 units. What can you say about the elasticity of demand by the Total Expenditure Method? 

(b) Briefly explain two exceptions to the law of demand. 

(c) Prepare an imaginary individual supply schedule and draw an individual supply curve based on it.

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Price (Rs.)Qty (Uts)Total expenditure

Here total expenditure remains constant, Elasticity of demand is equal to units, i.e. 

ep= 1

(b) Two exceptions of law of demand: 

1. Ignorance: Sometimes people buy more of a commodity at a higher price merely because they consider the commodity to be superior. If the price is low, people think the commodity to be of poor quality and may not like to buy it. 

2. Change in fashion or taste: The law does not apply if there is a change in fashion or taste. If a commodity, goes out of fashion, it may not be demanded even at a lower price.

(c) Individual Supply Schedule for Apples

Price (Rs./kg)Qty. Supplied (Kgs)

supply curve

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